Jump to Navigation
Over 30 Years of Experience handling tax controversies & tax disputes

Foreign bank accounts to be more transparent under new law

A new banking law known as the Foreign Account Tax Compliance act, or FACTA, is set to bring closer scrutiny on people in Massachusetts and elsewhere around the country who have significant assets with financial institutions outside the U.S. The law could serve to ensnare more people with tax evasion charges.

Already, Chinese state banking officials are speaking critically of the new regulations. They say FACTA runs counter to many of their privacy restrictions and will increase their costs to do business in the country. The risks are great: Institutions that do not comply beginning in 2014 could find themselves on the outside looking in.

The law mandates that foreign institutions report information to American authorities for U.S. citizens who have accounts worth more than $50,000. According to the Chinese officials, the benefits to U.S. Treasury coffers would be marginal at best. One estimate quoted revenue gains of about $8 billion over a 10-year period. The law would apply to fewer than 2 percent of American taxpayers.

Earlier this year, the IRS has been encouraging investors with offshore accounts to come forward with voluntary disclosures via their Offshore Voluntary Disclosure Program. People who choose to come forward have to pay a penalty on their assets in order to get current. However, those who do not come forward run the risk of criminal prosecution for tax evasion.

Neither of these choices -- penalty taxes or criminal prosecution -- is appealing to anyone, but before making the choice to come forward, many people consult with a tax attorney with experience in international voluntary disclosure rules.

Source: Reuters, "China central bank official slams U.S. tax dodging law," Michael Flaherty, Nov. 28, 2012

No Comments

Leave a comment
Comment Information
Have a Question? Ask an Attorney:

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close
Visit Our
Tax Law Website
Contact Information

Levins Tax Law, LLC
1671 Worcester Road, Suite 304
Framingham, MA 01701

Framingham Law Office Map

Levins Tax Law, LLC
38 Newbury Street, 6th Floor
Boston, MA 02116

Boston Law Office Map
By Appointment Only

Phone: 508-435-0118
Toll-Free: 888-333-9501
Fax: 888-333-0291